EXXON CORPORATION, PETITIONER V. CENTRAL GULF LINES, INC., ET AL.
No. 90-34
In The Supreme Court Of The United States
October Term, 1990
On Writ Of Certiorari To The United States Court Of Appeals For The
Second Circuit
Brief For The United States As Amicus Curiae Supporting Petitioner
TABLE OF CONTENTS
Question Presented
Interest of the United States
Statement
Summary of argument
Argument:
I. Minturn v. Maynard should be overruled
A. The historic antecedents of Minturn no
longer justify its result
B. Overruling Minturn would be in keeping
with efforts to rationalize the scope of federal
admiralty jurisdiction
II. The present case falls within the admiralty
jurisdiction of the district court
Conclusion
QUESTION PRESENTED
Whether an agent who procures and pays for necessary maritime
supplies for a vessel in maritime commerce is entitled to assert a
maritime lien against the vessel.
INTEREST OF THE UNITED STATES
The United States has a substantial interest in the scope of
admiralty jurisdiction, both in its capacity as an owner and operator
of ships, and in its role as a major shipper. Although maritime liens
do not lie against vessels owned by or operated for or by the United
States (46 U.S.C. App. 741; 46 U.S.C. App. 788), in personam actions
may be brought against the United States in all cases where admiralty
jurisdiction would lie if the vessel were privately owned or operated
(46 U.S.C. App. 742). Thus, the decision in this case may have a
significant impact on the availability of in personam actions in
admiralty against the United States.
Moreover, the United States has a general interest in the proper
and uniform application of the laws governing admiralty jurisdiction.
In response to the Court's invitation at the petition stage of this
case, the Solicitor General filed a brief urging that the petition be
granted.
STATEMENT
1. This case involves a vessel, the M/V Green Harbour ex William
Hooper (the Hooper); the vessel's owner, respondent Central Gulf
Lines, Inc.; the vessel's charterer, Waterman Steamship Corporation
(Waterman); and Waterman's fuel supplier, petitioner Exxon
Corporation.
Petitioner served for more than four decades as the exclusive
world-wide supplier of marine fuel for Waterman's vessels. Under the
terms of their agreement, Waterman notified petitioner when a Waterman
vessel needed fuel. Petitioner then either delivered the fuel to the
vessel directly, or (where petitioner had no local delivery
facilities) arranged with a local supplier to provide the fuel. When
a local supplier was used, petitioner paid the supplier and then
billed Waterman. In these situations, the practical effect of the
agreement was that the fuel supplier relied on petitioner's credit
rather than Waterman's. Pet. App. A23.
The local supplier used by petitioner at the port in Jeddah, Saudi
Arabia, was Arabian Marine Operating Co., Ltd. (Arabian Marine). The
agreement between Arabian Marine and petitioner stated that petitioner
would "solicit and arrange" for the sale of marine fuel to vessels
calling at the port of Jeddah; that Arabian Marine would supply this
fuel and petitoner would pay for it; and that Arabian Marine would
pay petitioner a commission. Petitioner never had title to the fuel;
it passed directly from Arabian Marine to the receiving vessel. Pet.
App. A24-A25.
2. On October 26, 1983, Arabian Marine delivered 4,242.47 tons of
marine fuel to the Hooper, pursuant to the agreement between
petitioner and Waterman and the agreement between petitioner and
Arabian Marine. Petitioner paid Arabian Marine for the fuel, and in
November 1983 billed Waterman for its $763,644 cost. Pet. App.
A24-A25.
The bill to Waterman was not paid. Instead, on December 1, 1983,
Waterman sought reorganization under Chapter 11 of the bankruptcy
laws. During reorganization proceedings, respondent agreed that,
should a court hold the Hooper liable in rem for the cost of the fuel,
respondent would assume personal liability for that cost. Respondent
provided petitioner with a letter of credit as security for this
promise. Pet. App. A25.
After a reorganization plan for Waterman was confirmed in June
1986, petitioner was permitted to pursue its claim for the cost of
supplying marine fuel to the Hooper. Pet. App. A25. /1/ Accordingly,
petitioner commenced this lawsuit in federal district court against
both respondent and the Hooper. Petitioner asserted that its
agreement with Waterman to procure fuel in Saudi Arabia fell within
the district court's admiralty jurisdiction. Petitioner therefore
claimed to have a maritime lien on the Hooper pursuant to the Federal
Maritime Lien Act, 46 U.S.C. 31342. /2/
3. The district court concluded that there was no admiralty
jurisdiction over petitioner's claim, and that without such
jurisdiction there could be no maritime lien. Pet. App. A27-A28. The
court noted that "(w)hile admiralty jurisdiction provides 'fairly
complete coverage of the primary operational and service contracts of
the shipping industry,' there still exist 'a few anomalous
exceptions'" (id. at A28, quoting G. Gilmore & C. Black, The Law of
Admiralty, Section 1-10 (2d ed. 1975)). One of these "anomalous
exceptions," the court continued, is the rule that general agency
contracts -- agreements to arrange for the provision of supplies and
services to a vessel -- fall outside the scope of maritime
jurisdiction. The court observed (Pet. App. A28) that in Peralta
Shipping Corp. v. Smith & Johnson (Shipping) Corp., 739 F.2d 798
(1984), cert. denied, 470 U.S. 1031 (1985), the Second Circuit adhered
to this exception, holding itself bound by this Court's decision in
Minturn v. Maynard, 58 U.S. (17 How.) 476 (1854). Applying "the
principles enunciated in Peralta" to the facts of this case (Pet. App.
A29), the district court concluded that the agreement whereby
petitioner arranged for the provision of fuel to Waterman's vessels at
Jeddah constituted an agency contract (id. at A29-A30); that the
services supplied were strictly "shoreside" (id. at A30); and that
there was no legitimate basis for distinguishing the general agency,
or husbanding, contract at issue in Peralta from the agreement here
(id. at A31).
In a subsequent opinion (Pet. App. A3-A21), the court denied
petitioner's motion for reconsideration. The court reiterated that
"Exxon wore its agency hat when it procured (marine fuel) for the
Hooper in Jeddah," and that "the locus of Exxon's relationship with
Waterman was the United States, not the dock in Jeddah." Id. at A6.
Accordingly, the case fit within the exception for general agency
contracts forged by this Court in Minturn. The court observed that
although the Minturn rule was an "anomalous exception to the broad
coverage of maritime jurisdiction (which) had 'suffered some erosion
in other circuits'" (id. at A11), the Second Circuit in Peralta had
refused to depart from Minturn, absent action by this Court. Id. at
A11-A12. The district court declined "to do what the Second Circuit
refused to do in Peralta." Id. at A12.
The district court rejected petitioner's argument that in procuring
fuel for Waterman it was acting as a special and not a general agent.
Pet. App. A13. The court determined that the forty-year relationship
between Waterman and petitioner, and petitioner's "quite broad"
authority under its agreement with Waterman, established petitioner as
Waterman's general agent. It observed that the Second Circuit had
refused to distinguish special agency agreements from general ones;
and that in any event, special agents that provide preliminary
services fall outside admiralty jursidiction. Id. at A13-A14. /3/
The court specifically ruled that the "services performed by
(petitioner at Jeddah) were merely preliminary" (id. at A17), and
that, accordingly, the contract at issue was not maritime, regardless
of how the agency was characterized. /4/
4. The court of appeals affirmed, "substantially for the reasons
given in (the district court's) two thorough opinions" (Pet. App. A2).
SUMMARY OF ARGUMENT
1. This Court's decision in Minturn v. Maynard should be overruled.
The Court's cryptic opinion in that case, which has been variously
interpreted by the lower courts ever since, may have rested on three
notions of admiralty jurisdiction: the tidewater exception to that
jurisdiction; the "hypothecation" requirement (that one claiming on a
contract must have a lien interest in the vessel before the contract
would be considered maritime); and the view that a demand for a
balance on accounts must be pursued in an action in assumpsit in a
common law court. Each of these notions has been squarely rejected by
this Court. Thus, whatever the basis for the decision may have been
in 1854, that basis no longer exists.
Moreover, there is no agreement in the lower courts on the current
meaning or vitality of the Minturn holding. The Second Circuit views
the holding as requiring the exclusion of all agency agreements from
the reach of admiralty jurisdiction. Other circuits appear to view
the decision only as barring an action for "an accounting as such"
(Hadjipateras v. Pacifica, S.A., 290 F.2d 697, 703 (5th Cir. 1961)),
or as excluding only certain kinds of agency agreements. Thus, a
determination that Minturn is no longer binding precedent will not
only eliminate an anomaly in maritime law and help rationalize
admiralty jurisdiction, it will also eliminate widespread confusion as
to the present impact of the Court's holding.
2. If this Court's decision in Minturn is overruled, the question
will remain as to what agency contracts fall within the reach of
admiralty jurisdiction. Some contracts -- including agency contracts
-- are sufficiently remote from maritime commerce that they do not
fall within that reach, and the limits of the jurisdiction must be
defined in the context of particular cases. But whatever those limits
may be, we do not believe they are exceeded here, since this agency
agreement involves a suit by an agent for reimbursement for the cost
of supplying a vessel with necessary marine fuel. The Court should
therefore determine that, on the record in this case, admiralty
jurisdiction has been established.
ARGUMENT
I. MINTURN v. MAYNARD SHOULD BE OVERRULED
Minturn v. Maynard, supra, created an oddity of federal admiralty
jurisdiction; its historical antecedents have been eroded, and its
serves no continuing purpose in current maritime law. It is beyond
dispute that an action seeking to recover the cost of supplying fuel
to a vessel -- the purpose of this suit -- is within a federal court's
admiralty jurisdiction. Yet, the rule of Minturn prevents the
assertion of admiralty jurisdiction simply because the owner's agent,
rather than a third party, seeks payment for the fuel. /5/ This
Court, in the years since Minturn was decided, has refused to make
admiralty jurisdiction turn on such artificial distinctions.
Accordingly, the rule that general agency contracts are outside
admiralty's reach should be abolished.
A. The Historic Antecedents Of Minturn No Longer Justify Its Result
Early in the nineteenth century, Justice Story observed that the
admiralty jurisdiction of the United States includes "all contracts
(wheresoever they may be made or executed, or whatsoever may be the
form of the stipulations) which relate to the navigation, business or
commerce of the sea." De Lovio v. Boit, 7 F. Cas. 418, 444 (C.C.D.
Mass. 1815) (No. 3776). Whether a contract is governed by maritime
law thus depends on the subject matter of the agreement. See North
Pacific S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S.
119, 125 (1919); Kossick v. United Fruit Co., 365 U.S. 731, 736
(1961). Nonetheless, as this Court has noted, "(t)he boundaries of
admiralty jurisdiction over contracts -- as opposed to torts or crimes
-- being conceptual rather than spatial, have always been difficult to
draw." Kossick v. United Fruit Co., 365 U.S. at 735. See S. Friedell,
Benedict on Admiralty Section 183, at 12-8 (7th ed. 1989). It is not
surprising, therefore, that decisions marking this boundary are often
difficult to reconcile. /6/ See Sisson v. Ruby, 110 S. Ct. 2892,
2900, 2901 & n.4 (1990) (Scalia, J., joined by White, J, concurring in
result and noting "(t)he impossibility of drawing a principled line
with respect to what, in addition to the fact that the contract
relates to a vessel * * * is needed in order to make the contract
itself 'maritime.'").
The source of one of the most idiosyncratic of admiralty's
jurisdictional rules is this Court's one-page decision in the 1854
case of Minturn v. Maynard, 58 U.S. (17 How.) 476. Much criticized,
Minturn has spawned an "agency exception" to the general rules
governing maritime contracts. Even when a contract's subject matter
is indisputably maritime, Minturn has been interpreted as proscribing
federal admiralty jurisdiction if the contract is one of agency.
The libellant in Minturn, who was both a general agent and a
broker, sued in personam to recover from a vessel's owners money he
had spent in procuring ship's services and supplies. Finding "nothing
in the nature of a maritime contract in the case," 58 U.S. (17 How.)
at 477, this Court dismissed the suit in an extremely brief opinion.
The Court's entire explanation for this conclusion was as follows
(ibid.):
The libel shows nothing but a demand for a balance of accounts
between agent and principal, for which an action in assumpsit,
in a common law court, is the proper remedy. That the money
advanced and paid for respondents was, in whole or in part, to
pay bills due by a steamboat for repairs or supplies, will not
make the transaction maritime, or give the libellant a remedy in
admiralty. Nor does the local law of California, which
authorized an attachment of vessels for supplies or repairs,
extend to the balance of accounts between agent and principal,
who have never dealt on the credit, pledge, or security of the
vessel.
The decision in Minturn may well have turned on restrictions
brought over from English admiralty practice -- principally the
tidewater exception to maritime jurisdiction, which focuses on the
location of the contract rather than its nature, and the hypothecation
requirement, i.e., that one suing on a maritime contract have a
hypothecation (a lien interest) in the vessel. To see the decision in
proper perspective, therefore, requires a brief look at Minturn's
historical antecedents.
1. a. In England, during the early Middle Ages, maritime matters
were dealt with by courts in English port towns. By the
mid-fourteenth century, however, English maritime supremacy and the
need for an efficient means to adjudicate maritime disputes led to the
creation of the High Court of Admiralty, a maritime tribunal with
broad powers. /7/ Almost from its creation, this tribunal was
unpopular with the local courts in the port towns, prompting
Parliament to enact two famous statutes narrowing admiralty's
jurisdiction. In the first of these statutes, 13 Rich. II, ch. 5
(1390), Parliament declared that "the admirals and their deputies
shall not meddle from henceforth with anything done within the realm,
but only of a thing done upon the sea * * *." In the second statute,
15 Rich. II, ch. 3 (1392), admiralty's jurisdiction was restricted
with more particularity: "of all manner of contracts, pleas, and
quarrels, and all other things rising within the bodies of the
counties, as well as by land as by water, and also of wreck of the
sea, the Admiral's court shall have no manner of cognizance, power,
nor jurisdiction."
Over the years, the common law courts continued their efforts "to
prevent the admiralty court taking cognizance of contracts made in the
country relating to maritime matters." D. Robertson, Admiralty and
Federalism 42 (1970), quoting Mears, The History of Admiralty
Jurisdiction, 2 Select Essays in Anglo-American Legal History 312, 335
(1908). For example (id. at 49-50):
Starting about 1544, prohibitions began to be used against
admiralty with increasing frequency. The great majority of
cases involving the use of that writ were cases of maritime
contracts made on land. The statutes of Richard II * * * were
interpreted literally, in order to oust the admiral of
jurisdiction over any case involving a contract made within the
body of a county (infra corpus comitatus). Thus,
charter-parties, policies of insurance, and other clearly
maritime contracts were held not within the admiralty
jurisdiction.
During the reigns of the Tudor kings, the Admiralty Court was
revived and enhanced, but it again came under attack from the
champions of the common law courts -- notably Sir Edward Coke. As one
commentator noted, "(i)mmediately upon assuming the chief justiceship
of the Court of Common Pleas in 1606, Coke enthusiastically took up
the battle against admiralty * * *. During his years on the bench,
Coke's militancy against the admiralty led him to deny its
jurisdiction over any matters having connection with the land." D.
Robertson, supra, at 55, 56.
One manifestation of Coke's approach was the tidewater doctrine,
which provided that admiralty courts had jurisdiction only over
matters taking place on the high seas and within the ebb and flow of
the tides. Any action on land, or on inland nontidal waters, was
therefore deemed to be outside admiralty's jurisdiction. See, E.
Coke, The Fourth Part of the Institutes of the Laws of England
Concerning the Jurisdiction of the Courts 137 (6th ed.) (London 1681);
D. Robertson, supra, at 56-58; De Lovio v. Boit, 7 F. Cas. at 421.
/8/
b. Article 3, Section 2 of the Constitution extends the judicial
power of the United States "to all Cases of admiralty and maritime
jurisdiction." Several early decisions of this Court -- apparently
assuming that this grant was limited by the English practice -- relied
on the tidewater doctrine in refusing to assert admiralty
jurisidiction over contracts whose subject matter was maritime but
whose locus was on land. The Steamboat Thomas Jefferson, 23 U.S. (10
Wheat.) 428, 429 (1825); Pevroux v. Howard, 32 U.S. (7 Pet.) 324, 343
(1833); The Steamboat Orleans v. Phoebus, 36 U.S. (11 Pet.) 175
(1837); United States v. Coombs, 37 U.S. (12 Pet.) 72, 76 (1837).
Cf. New Jersey Steam Navigation Co. v. Merchant's Bank, 47 U.S. (6
How.) 343, 392 (1848). /9/ But see De Lovio v. Boit, 7 F. Cas. at 444
(Story, J.).
In the mid-nineteenth century, this Court rejected the view that
the constitutional grant of admiralty jurisdiction to the federal
courts adopted the limitations on the English admiralty courts (Waring
v. Clark, 46 U.S. (5 How.) 440, 454-459 (1847)), and in 1851 the Court
specifically rejected the applicability of the tidewater doctrine,
noting "the unreasonableness of giving a construction to the
Consituation which would measure the jurisdiction of the admiralty by
the tide." The Propeller Genesee Chief v. Fitzhugh, 53 U.S. (12 How.)
443, 456 (1851). See Hine v. Trevor, 71 U.S. (4 Wall.) 555, 566
(1866) ("The Genessee Chief * * * removed the imaginary line of
tide-water which had been supposed to circumscribe the jurisdiction of
the admiralty courts").
Minturn was decided four years after The Genesee Chief and did not
expressly refer to the tidewater doctrine. Nevertheless, the
statement that "there is nothing in the nature of a maritime contract
in the case," (58 U.S. at 477) may suggest that the decision has its
roots in that doctrine; the contract was not "in the nature of a
maritime contract" because the reach of admiralty ended at the
tideline, so that the contract at issue, which was executed on land,
was outside admiralty's jurisdiction. /10/
2. Minturn also may reflect another 19th century exception to
admiralty jurisdiction -- the hypothecation requirement. At the time
Minturn was decided, it was deemed necessary for one claiming under a
contract to have a lien interest in a vessel before the contract would
be considered maritime. /11/ And a ship's agent (the so-called
"ship's husband") was not entitled to a lien. See I. Parsons, A
Treatise on Maritime Law 100 n.3 (1859); The Raleigh, 32 F. 633, 634
(S.D.N.Y. 1887); The J.C. Williams, 15 F. 558, 559 (S.D.N.Y. 1883).
/12/
In its short opinion, the Court in Minturn noted the absence of a
lien: "the local law of California, which authorizes an attachment of
vessels for supplies or repairs, (does not) extend to the balance of
accounts between agent and principal, who have never dealt on the
credit, pledge, or security of the vessel." 58 U.S. at 477. As one
commentator has observed, "(t)he Court's refusal to find that the
contract was maritime seems comprehensible only if Minturn is taken to
represent the then-common line of cases that advocated the necessity
of a lien interest against a vessel in all maritime contracts. The
Court apparently reasoned that the agent could not assert a lien
against a ship under any circumstances and therefore that the contract
could never be maritime." See Note, General Agency Agreements and
Admiralty Jurisdiction, 17 Conn. L. Rev. 595, 604 (1985).
Like the tidewater doctrine, the hypothecation requirement has long
been abolished. In Insurance Co. v. Dunham, 78 U.S. (11 Wall.) 1
(1870), the Court held that a contract may be maritime, and give rise
to a right to sue on the contract in personam, even when the contract
does not create a lien. As the Court explained (id. at 26), "the true
criterion is the nature and subject-matter of the contract, as whether
it was a maritime contract, having reference to maritime service or
maritime transactions." Subsequent decisions have confirmed that
admiralty jurisdiction in the United States is not limited by any
hypothecation requirement. See, e.g., North Pacific S.S. Co. v. Hall
Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119, 126 (1919);
Detroit Trust Co. v. The Barlum, 293 U.S. 21, 47 (1934).
3. Finally, Minturn may have turned on the Court's observation (58
U.S. at 477) that the case involved "nothing but a demand for a
balance of accounts between agent and principal, for which an action
in assumpsit, in a common law court, is the proper remedy." This
limitation on admiralty jurisdiction has also been disavowed, albeit
somewhat more recently than those previously discussed. In Archawski
v. Hanioti, 350 U.S. 532, 536 (1956), the Court rejected the argument
that an action in assumpsit automatically puts the case beyond the
reach of a court sitting in admiralty: "It is sufficient this day to
hold that admiralty has jurisdiction, even where the libel reads like
indebitatus assumpsit at common law, provided that the unjust
enrichment arose as a result of the breach of a maritime contract."
In short, Minturn rests on restrictions upon admiralty jurisdiction
that this Court has squarely rejected. See e.g., 7A J. Moore & A.
Palaez, Moore's Federal Practice Paragraph .250, at 3004-3005 (2d ed.
1988). Yet, the case remains as precedent and has been cited (at
least by the Second Circuit) as controlling authority for the broad
proposition that general agency contracts are outside admiralty's
jurisdiction. Pet. App. A11-A16, A31; accord Peralta Shipping Corp.
v. Smith & Johnson (Shipping) Corp., 739 F.2d 798, 802-804 (1984),
cert. denied, 470 U.S. 1031 (1985); Admiralty Oriental Line v.
Atlantic Gulf & Oriental S.S. Co., 88 F.2d 26, 27 (1937). Cf.
Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293, 301-302,
cert. denied, 484 U.S. 1042 (1987); Cory Bros. & Co. v. United
States, 51 F.2d 1010, 1012 (1931). Minturn's agency rule is thus like
the divided damages rule this Court abrogated more than a decade ago:
"The reasons that originally led to the Court's adoption of the rule
have long since disappeared." United States v. Reliable Transfer Co.,
421 U.S. 397, 410 (1975).
B. Overruling Minturn Would Be In Keeping With Efforts To
Rationalize The Scope Of Federal Admiralty Jurisdiction
The commentators are in broad agreement that "(general agency)
agreements are an integral part of, and in furtherance of, maritime
commerce and, consequently, should be cognizable within the admiralty
jurisdiction of the district court." 7A J. Moore & A. Palaez, Moore's
Federal Practice Paragraph .250 at 3006 (2d ed. 1988); accord G.
Gilmore & C. Black, The Law of Admiralty 28 n.94b (2d ed. 1975); S.
Friedell, Benedict on Admiralty Section 183, at 12-9 (7th ed. 1989).
This conclusion is consistent with the goal of uniformity underlying
the grant of admiralty jurisdiction to the federal courts, and with
the continuing trend toward rationalizing the scope of that
jurisdiction.
A primary basis for the establishment of federal admiralty
jurisdiction was the need for a uniform national law. Knickerbocker
Ice Co. v. Stewart, 253 U.S. 149, 160 (1920); 3 Elliot's Debates on
the Federal Constitution 352, 571 (2d ed. 1836); Sisson v. Ruby, 110
S. Ct. at 2898. Yet, as Justice Blackmun, joined by Justice Marshall,
noted in dissenting from the denial of certiorari in Peralta (470 U.S.
at 1031-1032), Minturn is an exception to admiralty jurisdiction "that
has been applied inconsistently and that has created unnecessary
confusion in the federal courts." Since "uniformity and predictability
in the maritime industry were the ends sought in the Constitution when
federal-court maritime jurisdiction was created in the first
instance," this inconsistency is particularly inappropriate in the
admiralty context (id. at 1034).
The inconsistencies in the interpretation of Minturn are pervasive.
As the district court noted, Pet. App. A11-A12, A29-A31, the Second
Circuit remains committed to the view that, under Minturn, agency
agreements are excluded from admiralty jurisdiction. Although the
Second Circuit has stated that it would "welcome" Minturn's overruling
(Peralta, 739 F.2d at 804), it has rejected a variety of distinctions
that limit the impact of Minturn in other circuits, noting that "such
hair-splitting distinctions would blur, if not obliterate, a rather
clear admiralty demarcation" (ibid.).
The Fifth Circuit has taken a diametrically different approach,
refusing to recognize any general rule excluding agency agreements
from admiralty jurisdiction. In Hadjipateras v. Pacifica, S.A., 290
F.2d 697, 703 (1961), the Fifth Circuit held that an action for breach
of an agency contract for the management and operation of a vessel is
within the admiralty jurisdiction, since "the contract is everything
classically known as a martime contract. It concerns a ship. It
relates not only to a ship; its very purpose is to effectuate the
physical, economic operation and employment of a vessel." In so
holding, the court observed that Minturn presumably forecloses
admiralty jurisdiction over an action for "an accounting as such" (290
F.2d at 704 & n.15, noting "doubts * * * cast" on this restriction by
cases such as Archawski v. Hanioti, supra).
Similarly, the Ninth Circuit, in Hinkins Steamship Agency v.
Freighters, Inc., 498 F.2d 411, 412 (1974), questioned Minturn's
continued vitality, and found the agency agreement at issue there to
be a maritime contract. The Ninth Circuit emphasized that although
the husbanding agent had "procured (maritime services) and did not
perform them directly, * * * (the fact that) their performance was its
direct responsibility, that the services were clearly maritime and
necessary for the continuing voyage, and that (the agent) was directly
engaged in supervision, makes (the service) maritime and the contract
sued upon a maritime contract" -- particularly since the agreement was
limited to a specific voyage and "there was repeated attendance on
board the vessel" by the agent. Id. at 412.
The circuits, therefore, are clearly in disagreement about the
application of Minturn and the continued vitality of its holding.
While some courts have strained to reconcile the disparate holdings,
see E.S. Binnings, Inc. v. M/V Saudi Riyadh, 815 F.2d 660, 664 (11th
Cir. 1987), the decisions appear in large measure to be
irreconcilable. For instance, the Second Circuit in Admiralty
Oriental Line v. Atlantic Gulf & Oriental S.S. Co., supra, ruled that
a "managing operator" agency contract was not within admiralty
jurisdiction, but the Ninth Circuit in Hinkins reached a contrary
result, precisely because the contract before it provided for direct
management services. See Peralta, 739 F.2d at 804.
In addition, the circuits are at odds over whether the status of
"special agent" removes the bar of the Minturn rule. /13/ In Hinkins,
the agent had responsibility for only a specific voyage, and thus no
long-term relationship with the owner. The Ninth Circuit found that
admiralty jurisdiction could be invoked, presumably since the duties
involved were those most usually carried out by a special agent,
rather than a general agent. Similarly, in Ameejee Valleejee Sons v.
M/V Victoria U., 661 F.2d 310, 312 (4th Cir. 1981), the court stated
that while a general agent cannot invoke admiralty jurisdiction, a
special agent can. The court found it difficult to formulate a test
for general agency, however, and observed that the Federal Maritime
Lien Act had "somewhat impaired if not eliminated" the rule that the
enforcement of contracts by general agents falls outside admiralty's
jurisdiction. See also Compagnia Maritima La Empresa, S.A. v.
Pickard, 320 F.2d 829 (5th Cir. 1963) (appearing to distinguish a
general agent from a special agent); The Eurana, 1 F.2d 684, 685 (3d
Cir. 1924) (suggesting that a lien would be available to a special
agent, but not to a general agent). On the other hand, the Second
Circuit, in Peralta (739 F.2d at 803-804), refused to "subdivid(e) the
category of general agency contracts based on the degree of importance
of the services rendered by the agent or on the extent of supervision
of performance," and criticized the Hinkins distinction between
general and special agency agreements (739 F.2d at 803 n.4). Accord
Continental Cameras Co. v. FOA & Son Corp., 658 F. Supp. 287, 289
(S.D.N.Y.), aff'd 831 F.2d 45 (2d Cir. 1987); Pet. App. A13-A16.
/14/
Minturn warrants reconsideration not only because of the confusion
concerning its scope, but also in light of the trend during the past
century and a half to eliminate archaic restrictions on admiralty
jurisdiction. Both Congress and this Court have participated in the
process of rationalization. Congress has enacted a series of
liberalizing statutes beginning in 1884, /15/ and this Court has
repeatedly overturned earlier doctrines that are inconsistent with the
principle that admiralty jurisdiction extends generally to
transactions "related to ships and vessels, masters and mariners as
agents of commerce" Kossick v. United Fruit Co., 365 U.S. at 736.
/16/ See United States v. Reliable Transfer Co., 421 U.S. at 409
(noting that "Congress has largely left to this Court the
responsibility for fashioning the controlling rules of admiralty
law.").
Minturn is just such a relic of archaic doctrine. Whether or not a
contract is to be considered maritime, and thus within the admiralty
jurisdiction of the federal courts, should not turn simply on whether
or not the contract is one of agency. Indeed, the conclusion that
general agency contracts are not within admiralty jurisdiction appears
inconsistent with the broad terms of the Federal Maritime Lien Act,
which provides (46 U.S.C. 31342):
(a) person providing necessaries to a vessel * * * (1) has a
maritime lien on the vessel; (2) may bring a civil action in
rem to enforce the lien; and (3) is not required to allege or
prove in the action that credit was given to the vessel.
The district court rejected the applicability of the Federal Maritime
Lien Act on the ground that it did not extend the bounds of admiralty
jurisdiction (Pet. App. A26-A28). It seems equally appropriate to
conclude, however, that the Act reflects the current view of the scope
of admiralty, and that Minturn is simply an outmoded reflection of an
earlier, more limited view of that jurisdiction.
Nor do we believe that any settled expectations require adherence
to Minturn. In the first place, even assuming universal agreement on
the meaning of that decision, it is hard to see precisely what
justified reliance interests will be undermined if Minturn is
overruled. Second, and more important, there is no such universal
agreement, and thus continuance of the Minturn precedent can only lead
to uncertainty in some instances, and forum shopping in others.
II. THE PRESENT CASE FALLS WITHIN THE ADMIRALTY JURISDICTION OF THE
DISTRICT COURT
If, as we suggest, the Court determines that Minturn should be
overruled and that agency agreements are not per se excluded from the
scope of admiralty jurisdiction, the question will remain whether
particular agency agreements fall within that jurisdiction. As the
district court noted (Pet. App. A16-A17), some contracts are
sufficiently remote from maritime commerce, and so much a part of
regular domestic commerce, that they are regarded as "preliminary" and
beyond the reach of admiralty jurisdiction. A contract to sell timber
to a shipbuilder, for example, is well-removed from the affairs of
maritime commerce. Cf. The Thames, 10 F. 848 (S.D.N.Y. 1881) (broker
who procured a charter party has no lien on a vessel); note 3, supra.
In the present case, the district court regarded the Minturn rule
as a subset of the rule excluding preliminary contracts from the scope
of admiralty. Pet. App. A16-A17. It therefore might be appropriate,
once that ground of decision has been rejected, to remand the case for
determination of the question whether this particular agency contract
is "preliminary" in nature.
But in our view, no such remand is required on the facts presented.
The marine fuel supplied to the ship was clearly "necessary" to the
ship's operation. /17/ Moreover, petitioner did not simply arrange
for the sale of fuel by Arabian Marine to Waterman; rather,
petitioner paid Arabian Marine for the fuel and seeks reimbursement
for that payment here. /18/ Thus, whatever the limits of admiralty
jurisdiction with respect to agency agreements, those limits are not
approached in this case.
CONCLUSION
The decision of the court of appeals should be reversed.
Respectfully submitted.
KENNETH W. STARR
Solicitor General
STUART M. GERSON
Assistant Attorney General
DAVID L. SHAPIRO
Deputy Solicitor General
HARRIET S. SHAPIRO
Assistant to the Solicitor General
ROBERT S. GREENSPAN
RICHARD A. OLDERMAN
Attorneys
FEBRUARY 1991
/1/ Petitioner received certain cash and stock dividends under the
reorganization plan; any judgment recovered in this action would be
reduced to reflect these receipts. Pet. App. A25.
/2/ Formerly 46 U.S.C. 971 (1982). See Pet. App. A26.
/3/ Commencing at least as early as 1881, in The Thames, 10 F. 848
(S.D.N.Y. 1881), courts in the Second Circuit embraced the rule that
contracts of a "preliminary" nature are outside federal admiralty
jurisdiction. Ultimately, the holding of this Court in Minturn and
the rule declared in The Thames became entwined. In Cory Bros. & Co.
v. United States, 51 F.2d 1010, 1012 (1931), the Second Circuit
explained Minturn as involving a preliminary service contract.
The district court in this case, observing that "the agency
exception to maritime jurisdiction is less of an anomaly when viewed
as a subset of the preliminary contract doctrine," rejected
petitioner's invitation to "disentangle the preliminary contract rule
from the general agency rule." Pet. App. A16-A17. See id. at A29
(quoting The Thames).
/4/ The district court also rejected petitioner's claim that it was
entitled to an admiralty lien by virtue of subrogation (Pet. App.
A18-A21). Petitioner does not seek further review of this claim.
/5/ For example, in this case, petitioner's claim for recovery
under its contract with Waterman for fuel supplied from its own
facilities in New York fell within admiralty jurisdiction (Pet. App.
A33), although deliveries under the same contract through the local
supplier in Jeddah did not.
/6/ It has been held, for example, that a contract to repair a
vessel is maritime, New Bedford Dry Dock Co. v. Purdy, 258 U.S. 96
(1922), yet a contract to build a vessel is not, Thames Towboat Co. v.
The Schooner Francis McDonald, 254 F.2d 242 (1920), People's Ferry Co.
v. Beers, 61 U.S. (20 How.) 393 (1857); that a policy of insurance on
a vessel is maritime, Wilburn Boat Co. v. Fireman's Fund Insurance
Co., 348 U.S. 310 (1955), Insurance Co. v. Dunham, 78 U.S. (11 Wall.)
1 (1870), although a contract to obtain such insurance is not, F.S.
Royster Guano Co. v. W.E. Hedger Co., 48 F.2d 86 (2d Cir.), cert.
denied, 283 U.S. 858 (1931); Marquardt v. French, 53 F. 603 (S.D.N.Y.
1893); and that a charter party is a maritime contract, Fisser v.
International Bank, 175 F. Supp. 305 (S.D.N.Y. 1958), but a broker's
contract to secure such a charter party is not, Cory Bros. & Co. v.
United States, 51 F.2d 1010 (2d Cir. 1931); Brown v. West Hartlepool
Steam Navigation Co., 112 F. 1018 (5th Cir. 1902). Moreover, while a
lease of cargo containers for use on a ship is maritime, CTI-Container
Leasing v. Oceanic Operations, 682 F.2d 377 (2d Cir. 1982), as is a
contract to purchase equipment for a ship, e.g., Radiomarie Corp. v.
Gulf Northern Co. 394 F. Supp. 381 (E.D. Mo. 1975), a contract to
purchase a vessel is not, Economou v. Bates, 222 F. Supp. 988
(S.D.N.Y. 1963).
/7/ According to one writer, the court's jurisdiction included
"torts and offenses on the high seas, on British seas, and in ports
within the ebb and flow of the tide, matters of prize, * * *, and
causes arising on the seashore and in ports." D. Robertson, Admiralty
and Federalism 40 (1970), quoting Mears, The History of Admiralty
Jurisdiction, 2 Select Essays in Anglo-American Legal History, 312,
328-329 (1908).
/8/ As the Court explained in Grant v. Poillon, 61 U.S. (20 How.)
162, 168 (1857), under the tidewater doctrine "contracts upon land,
though to be executed on the sea, and contracts at sea, if to be
executed on the land, are not cognizable by the English admiralty."
/9/ The acceptance of the tidewater doctrine may have been in part
due to a desire not to interfere with state court jurisdiction.
Chancellor Kent observed (1 J. Kent, Commentaries 372 (12th ed. 1873))
If the admiralty and maritime jurisdiction of the district
courts embrace all maritime contracts, then suits upon policies
of insurance, charter-parties, martime hypothecations, contracts
for building, repairing, supplying, and navigating ships, and
contracts between part owners of ships, must be tried in the
admiralty by a single judge, to the exclusion of the trial by
jury; and the state courts would be divested, at one stroke, of
a vast field of commercial jurisdiction.
/10/ As Professor Moore has noted, "some remnant of the restrictive
English mentality regarding the admiralty appears to have been present
in the minds of the court that decided the early cases." 7A J. Moore &
A. Palaez, Moore's Federal Practice Paragraph .250, at 3004-3005 n.10
(2d ed. 1988). Indeed, "(o)nly by applying a location test (i.e., the
tidewater doctrine) could it be convincingly stated that agreements to
procure charters, to arrange contracts or maritime affreightment, and
to arrange for or oversee the numerous other necessary activities
often delegated to brokers and agents are not directly related to
maritime commerce." Id. at 3004-3005.
/11/ See Gardner v. The New Jersey, 9 F. Cas. 1192, 1195 (D. Pa.
1806) (No. 5233); Note, General Agency Agreements and Admiralty
Jurisdiction, 17 Conn. L. Rev. 595, 597-598 (1985).
/12/ At the time Minturn was decided, the ship's husband was
usually a part owner. See Gould v. Stanton, 16 Conn. 12, 23 (1843);
I. Parsons, A Treatise on Maritime Law 97 (1859); G. Abbott, Treatise
of the Law Relative to Merchant Ships and Seamen 136 (5th American ed.
1846). The rationale for denying the lien was that a part owner
acting as ship's husband dealt on the credit of his fellow owners, not
the credit of the vessel. It was thus generally accepted that
"admiralty has no jurisdiction at all in matters of account between
part-owners." The Steamboat Orleans v. Phoebus, 36 U.S. at 182; cf.
Davis v. Child, 7 F. Cas. 112, 116-117 (D. Me. 1840) (No. 3628).
When the Court in Minturn was faced with an action for an
accounting brought by a general agent against a vessel's owners, it
may have appeared that the controversy was one between co-owners
seeking an accounting. In fact, however, Minturn was not a co-owner
of the vessel. See Note, supra, at n.31 citing Minturn Supreme Court
Record at 3. Thus, the Minturn Court may have based its conclusion on
an assumption not supported by the facts.
/13/ "A special agency properly exists, when there is a delegation
of authority to do a single act; a general agency properly exists
where there is a delegation to do all acts acts connected with a
particular trade, business, or employment." J. Story, Commentaries On
The Law Of Agency Section 17 (9th ed. 1982).
/14/ The Second Circuit has cited Hinkins with approval, however,
in concluding that "(t)he preparation and processing of export
declarations, delivery orders, dock receipts, bills of lading and
advance notification of shipment are not services endered preliminary
to a voyage(,) rather they are essential to it," and that,
accordingly, a freight forwarder who carries out these functions may
sue in admiralty. Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d
293, 302-303, cert. denied, 484 U.S. 1042 (1987).
/15/ In Detroit Trust Co. v. The Barlum, 293 U.S. at 43-44, this
Court recognized that Congress has the power to define the precise
scope of the constitutional grant of admiralty jurisdiction to the
federal courts, even if that definition expands the limits of that
jurisdiction, so long as the grant remains within the purposes and
general understanding of the concept. Congress has acted on that
authority. See e.g., Act of June 26, 1884, ch. 121, Section 18, 23
Stat. 57-58, a interpreted by the Court in Richardson v. Harmon, 222
U.S. 96, 101-102 (1911) (extending admiralty jurisdiction to include
damages by a vessel to a land structure); the Federal Maritime Lien
Act of 1910, ch. 373, 36 Stat. 604, and the Act of June 5, 1920, ch.
250, 41 Stat. 1005 (permitting a person providing necessaries for a
vessel on the order of the owner to assert a maritime lien on the
vessel, and to bring a civil action in rem to enforce the lien,
without proving that credit was given to the vessel); the Death on
the High Seas Act of 1920, ch. 111, 41 Stat. 537 (giving admiralty
jurisdiction over suits for damages for death caused by a wrongful act
on the high seas); the Merchant Marine Act of 1920, ch. 250, 41 Stat.
1007 (incorporating into the maritime law rules drawn from the Federal
Employers Liability Act); the Longshoremen's and Harbor Workers'
Compensation Act of 1927, ch. 509, 44 Stat. 1424; the Admiralty
Jurisdiction Extenstion Act of 1948, ch. 526, 62 Stat. 496 (extending
admiralty jurisdiction to damages to person or property on land caused
by vessel on navigable water); Act of Nov. 23, 1988, Pub. L. No.
100-711, 102 Stat. 4735 (revising ship mortgage and lien laws to
simplify administration of those laws, "to make (them) less cumbersome
for the maritime community, and to make (them) more understandable for
everyone involved." H.R. Rep. No. 918, 100th Cong. 2d Sess. 1 (1988)).
/16/ E.g., The Propeller Genesee Chief, 53 U.S. (12 How.) 443
(1851) (rejecting tidewater doctrine); Insurance Co. v. Dunham, 78
U.S. (11 Wall.) 1 (1870) (constitutional grant of admiralty
jurisdiction not limited by restrictive English precedents);
Archawski v. Hanioti, 350 U.S. at 536 (admiralty jurisdiction extends
to quasi-contract claim for unjust enrichment, "even where the libel
reads like indebitatus assumpsit at common law"). Cf. Executive Jet
Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 268 (1972) (no
admiralty jurisdiction where tort had no "significant relationship to
traditional maritime activity").
/17/ Cf. the Federal Martime Lien Act, 46 U.S.C. 31342, p.24,
supra, which provides for a maritime lien for a person supplying
"necessaries" to a vessel. The term "necessaries" includes "supplies
which are necessary to keep the ship going." Dampskibsselskabet v.
Signal Oil & Gas Co., 310 U.S. 268, 280 (1940) (fuel oil); Tramp Oil
& Marine Ltd. v. M/V Mermaid I, 630 F. Supp. 630, 632 (D.P.R.), aff'd,
805 F.2d 42, 44 (1st Cir. 1986) (same).
/18/ Even before the enactment of the Federal Maritime Lien Act, an
action to recover money owed for the supply of fuel to a vessel in a
foreign port would have been deemed within admiralty's jurisdiction.
See, e.g., Supreme Court Rule 12, 80 U.S. (13 Wall.) xiv (1872); The
J.E. Rumbell, 148 U.S. 1, 12 (1893); J. Moore & A. Palaez, Moore's
Federal Practice Paragraph .230 (4-5), at 2853, (citing Martran S.S.
Co. v. Aegean Tankers Ltd., 170 F. Supp. 477, 479 (S.D.N.Y. 1950)).
Cf. S. Friedell, Benedict on Admiralty Section 36 (7th ed. 1989) ("In
the older codes of Continental Europe, the concept of (the
materialman's lien) existed although it was not definitely defined.
Under this law, the lien was given unqualifiedly to the furnisher of
necessaries, and it made no difference who he was, or where or how the
necessaries were obtained.").